About Me

Friday, 17 May 2013

At The Risk Of Repeating Myself

“Little
Local Difficulties” from June 2009.

Quote:

We have
been here before. In January 1958 a
beleaguered Government under a non-elected Prime Minister, Harold Macmillan,
lost three senior ministers in a row over economic management and fiscal
policy. “Supermac” brushed the major
policy disagreements and resignations aside by referring to it as a “Little
local difficulty”.

Despite the
howling of the press, and adverse bye-election and council election results,
Macmillan carried on with his high spend policies of public services expansion
to create employment.

He ignored
calls for fiscal restraint and caution. A
host of learned economists were summoned to recommend that an annual rate of
inflation of 3% compound would be entirely manageable.

It would
lead to sustainable economic growth, maintain the value of the power, enable
increased public spending, and last but not least keep the UK as a world
economic and military power. Well, we
all know what happened in the next two decades don’t we?

But do not
forget, as I have not forgotten, that Macmillan won the election in the next
year, 1959. I recall too well at the
count I attended the astonishment and despair of all those Gaitskellite Labour
followers when the results were announced.

It was
clear even at our local level that against all the odds the Conservatives had
survived, and Macmillan was clear for another give years. Or everyone thought he was until the Profumo
Affair and his prostate failed in 1963.

But it was
Macmillan who when asked by the new President Kennedy of the USA (they were
related by family marriages) what the main problems he faced were, answered,
“Events, my dear boy, events.”

In the
meantime, as Martin Wolf in the FT points out, we have a fiscal problem that is
very serious, will not go away, and needs difficult decisions to be taken very
soon, and not after the next General Election.